39. Work corporations

39.1. Short description

In the summer of 2011, several so-called “work corporations” (werkcorporaties) started operating in the municipality of Nijmegen. These work corporations aim at re-employing social assistance (Wet Werk en Bijstand, or WWB) receivers with a considerable distance from the labour market by offering them a place where they can combine work and education. Basically every entrepreneur can initiate a work corporation, as long as it complies with a few conditions: it should offer people a chance to develop themselves (mainly through education); the service or product delivered should have societal relevance (which may be interpreted very broadly); and a work corporation should be able to be self-sufficient. Also important is that working at a work corporation should have a temporary character; this means that after a maximum of 2 years, people should leave the organisation. Because of this, it really differs from forms of subsidised labour in the Netherlands, where people could be employed for more than 10 years.

The concept of work corporations was introduced in the city by the local Labour Party (Partij van de Arbeid) in their party programme of 2010. In just two sentences, the party expressed the need for the development of work corporations in order to preserve subsidised jobs. It mentions a particular foundation (Foundation Dagloon) as an example, which successfully provided jobs for homeless people, by doing contractual work in the urban upkeep service sector for, inter alia, the municipality and a big garbage collection company. When the Labour party formed a coalition with the Green party (GroenLinks) and the social-liberal party Democrats ’66 (Democraten ’66) in 2010, work corporations were included in their common manifesto. Here, the concept was seen as an instrument that could better constitute the outflow of beneficiaries to work than subsidised labour. Still, no detailed plan about what was regarded as a work corporation was developed yet. In March 2011, a policy plan was published which made the idea more concrete. Work corporations were explicitly considered as a new re-employment scheme to “modernise” subsidised labour (Gemeente Nijmegen 2011).

The need for rearranging re-employment services was given by the financial cutbacks that were imposed by national government. In fact, the municipal budget of 26 million euro for re-employment in 2012 would be brought down to 13 million euro in 2013 and eventually to 8 million euro in 2014 and thereafter. Hence, in order to “realise the ambitions” of the municipality with respect to reemployment, the municipality was forced to adapt their current policy in an “innovative fashion”. This meant the reduction of subsidised jobs to zero, the creation of work corporations and cooperation between municipal organisations that were dependent on subsidised employees. Yet, it was believed that work corporations should not be seen as a one-on-one replacement for subsidised jobs. A work corporation should operate at the intersection of business and civil society. This can be seen as one of the innovative elements of the project. For the municipality, the possibility for a re-employment organisation to earn money is the particularly new aspect. For the organisations that are familiar with subsidised labour it is especially the educational facet, the emphasis on personal development, and responsibility for outflow to work, which break with tradition.

Work corporations are not new in the Netherlands. The idea was used for unemployed youth between 2004 and 2008 in three Dutch cities, financed by a European Social Fund (ESF) subsidy. Yet, the municipality of Nijmegen clearly states that it does not work with a “blueprint”. Rather, it has been trying to develop a flexible model which suits the locality of Nijmegen, and which could be changed according to experiences through time. Especially important here is the recognition of existing organisations that are already executing certain programmes with characteristics of the work corporation concept. The involvement of these organisations from the very beginning led to the start of six work corporations in October 2010: “We have actually written the plan how work corporations must look like during the discussions with those [interested] organisations” (Mark van der Velden, policy advisor). Now, there are over ten work corporations active in Nijmegen.

Table 1 provides some examples. Most work corporations are part of larger welfare organisations, but a few private companies also started a work corporation. Some are based on a particular method which is used in other cities in the Netherlands as well.

Table 1. Examples of work corporations in Nijmegen

39.2. Conceptions and ways of addressing users

For the municipality, the most important aspect of the work corporations is that after a year or two users will gain sufficient skills to be able to find a job on the regular labour market. The municipality distinguishes several types of clients, with differing talents and capabilities. It states that for every individual it should be judged whether working in a work corporation is the most suitable re-employment strategy, and, moreover, whether the available work suits the client, since work corporations also differ from each other (Gemeente Nijmegen 2011). Thus, there is some level of personalisation involved: not every person that receives social assistance benefits is automatically qualified to join a work corporation. This personalisation is represented in the composition of the group of users of different work corporations. For instance, Fashion with a Mission attracts mainly women (of whom many are single parents), while Green & Maintenance, Bike-work and Solar Train consist only of men.

The professionals and managers of the work corporations generally agree that education and teaching “technical” skills is important, but attaining social skills is at least as essential. This includes the basic elements of being an employee, such as getting in on time, asking for a free day or planning holidays, calling in sick, etc. But it also means learning to cooperate with other participants, taking responsibility and being an active employee. This might be somewhat more important for participants who have had no education at all and have not worked at all during their lives, compared to users who have already completed some education, such as the participants of Social Work.

Most work corporations would prefer to have intrinsically motivated participants. Therefore, almost all users of the different work corporations must have an intake conversation or sometimes even an official job application. Most work corporations wanted to know whether potential participants like the activities that come along with the job they would be trained in and whether they would like a regular job in this particular profession. Two important reasons for selecting on intrinsic motivation were mentioned: (1) it is almost impossible to complete the programme successfully without a certain passion or preference for the profession; and (2) the performance target that has been set for outflow to work cannot be reached with unmotivated workers.

Lack of capabilities often does not matter at most work corporations (or is even a “requirement” in terms of educational level). Exceptions include working at Social Work, which requires a certain level of social skills and language fluency, and Solar Train, which requires an affinity with driving. For the corporation Green & Maintenance however, even motivation is not that important. The manager of this work corporation acknowledged that this makes it sometimes difficult, especially if you want to get users a regular job. On the other hand, he said that some people enter with great reserve, but after 12 months they like it so much they actually would like to stay even longer. A project leader from World Cooks also noted that a slight form of pressure would not be wrong, if that is necessary to persuade participants: “It is always possible that someone finds out after a couple of weeks that it is not so bad after all”, she says. However, in the case of the reverse scenario – a participant lacks any form of motivation – sanctions may be given. Users sign a contract with the municipality where basic rights and obligations are described. A sanction could include a (temporary) reduction of the received benefit – for example if a user has repeatedly not shown up. Until now, this measure has been rarely used. Some project leaders noticed that it would be useful to have more options to put pressure on users, for instance, when a participant is absent for a longer period. Yet, one user complained because he voluntarily applied for a work corporation, and had to sign the contract after a few weeks working there. Because he was not urged to participate by the municipality, he was astonished to find out his benefit could be stopped if he did not comply with the rules.

People enter work corporations for different reasons. One participant of Fashion with a Mission said the opportunity to get a diploma was the most important motivator for her to participate. A diploma would give her more chance on the labour market, she thought. For another participant of Fashion with a Mission, the work corporation is just a step to a higher level of education. Yet another client, who thought her chances on the labour market were already very small because of her relatively high age, especially values the social contacts at work and the rhythm of a working life. Professionals emphasise as well that having colleagues to chat with is very valuable for people who have been unemployed for a long time. Moreover, for some participants, just the fact that they must change things at home to be able to go to work – for instance, arranging child care – already ensures that their world broadens.

Most work corporations try to encourage an ordinary work environment with a manager (or project leader or mentor) and his or her employees. Participants who were interviewed therefore regard themselves mainly as employees, although they don’t receive salary (they keep their social assistance benefit plus a 600-euro bonus after half a year). However, a user (of World Cooks) said he likes to see himself as a student, being occupied with learning rather than with work. At the same time, many project leaders also try to create a safe and lenient environment – as a project leader from Fashion with a Mission said “if they cannot succeed here, then where can they?”. Users indeed said that they appreciate the absence of work stress (although this might differ between work corporations) and that they feel they could ask and tell anything to the project leaders.

In general, the concept of work corporations stems from the idea that people who are in need of guidance in their search for a job are still able to generate income. In this sense, the municipality looks at what clients of social assistance are capable of rather than what they cannot do. This is clearly represented in the vision of the Craft Square, which takes empowerment as its main goal: guiding participants to develop the feeling that they are in control over their own life, the confidence that everything will be all right and the sense that they can do something about their situation.

39.3. Internal organisation and modes of working

If an existing organisation or a new organisation wants to become a work corporation, a starting grant will be appointed after approval. Instruments that are used for the re-employment of participants (such as coaching and education) are also financed by the municipality. Structural overhead costs and non-structural development costs must be compensated by the income the organisation earns by selling the services or products it offers. In the first 1.5 years this will be partially funded by the municipality, but after 2 years, this should all be covered by the work corporations. The concept of work corporation does not apply to for-profit companies – all profit should be invested in the reintegration of the clients.

There are a few possible types of work corporations. A first type is a “traditional” work corporation. Such an organisation tries to get people back to work through work experience and education. A second type is called a “broad” work corporation. Here, “activation” is part of the organisation as well. Activation is especially suitable for people who have not worked for a long time and who really need to develop certain basic social skills in order to do regular work. A third type only focuses on this activation part, and could be considered to be a recruiter for the other two types of work corporations. In practice, most work corporations are the traditional type, because this form is best suited to generate income. Nevertheless, work corporations that involve activation too, such as Green & Maintenance, could be beneficial, since work corporations then “organise basically their own breeding ground to assure outflow to their own work corporations” (Policy advisor).

At a basic level, three parties are involved in a work corporation: the work corporation itself, the municipality, and (often) an educational institute. The responsibilities for the first two parties are clearly described in the development plan of the municipality. The work corporation is involved with the selection of participants; creates a personal re-employment programme/development plan for the participant; guides the participant during the development process; and provides education/training. The municipality has the primary role in the recruitment of participants, if possible in cooperation with the work corporation; provides required facilities for the re-employment programme according to the WWB act and other regulations; and monitors the output target (in terms of outflow of clients). The municipality makes a contractual arrangement with the work corporations. The content of the contracts is not always the same. Some work corporations have to comply with a performance target – for example, 66 per cent of all participants must find a job or follow a higher level of education after they finish the programme of the work corporation. Other work corporations do not have to fulfil any targets. This could depend on the characteristics of the participants or the sector people are trained in. For instance, the labour market for bus drivers and bike mechanics is fairly good compared to the fashion or clothing branch. Therefore, the municipality might expect higher rates of outflow for work corporations in the former sector than for the latter. Project leaders however do not always understand why there are differences in the contracts between the work corporations and the municipality.

Almost every work corporation cooperates with an educational institute or provides an internal educational programme. Often, the study programme has a duration of 1 year, sometimes 2 years (e.g. Social Work and Bike-work), but there are also educational programmes that are more flexible, such as getting a bus driver’s licence, which could be done in a much shorter period. Educational institutes are sometimes involved in screening the participants to assess if they have the desired educational level. Many work corporations provide extra language courses for participants who have difficulties with speaking, writing and reading Dutch.

The internal organisation of the work corporations differs per work corporation. Often, participants work for approximately 25-30 hours per week, of which about 8 hours are in education. Educational programmes are followed at the workplace if possible – teachers attend the work corporation instead of the other way around. How participants are helped with developing the practical, technical skills differs. Sometimes, general guidance, specialised help and project management are divided between different persons, but sometimes multiple functions are carried out by the same person (e.g. Fashion with a Mission).

39.4. Interaction with the local welfare system

As noted, the municipality has involved existing organisations active in the field of subsidised labour or re-employment services to develop a plan for work corporations. For several work corporations, such as Green & Maintenance, World Cooks and Social Work, the launch of the plan actually meant just a continuation of their policy. This could mean the impact on the governance of the local welfare system is not particularly high. Nevertheless, the emphasis on generating income and the outflow to regular work has led or still has to lead to some changes in the management of these organisations. The necessity of generating income will put more pressure on organisations to look for potential buyers of their product or service. Sometimes, the municipality is the biggest or sole commissioner of the service, as is the case with Social Work, because it is in its interest that the service is delivered. In other cases like Green & Maintenance, a housing corporation is the biggest client because they benefit from the service (maintaining their buildings), but also because participants of the work corporation may be renters of their housing.

Yet, what probably has more impact on the governance of the local welfare system is the shift of responsibility for re-employment from the municipality towards the organisations in the field. In particular, organisations that were used to working with subsidised employees are now required to think quite differently about the future of the participants. Re-employment was never something these organisations had to worry about. Many work corporations recognise the importance of close collaboration with the specific economic sector to be able to assure outflow to regular work. For example, Bike-work cooperates with a big cycle company because they are in need of employees. Hence, participants in that work corporation have high chances of finding a job there. Solar Train has close connections with the taxi sector, so that it can send its recently schooled drivers directly to employers.

The concept of work corporations is still relatively new and the municipality clearly maintains that there is room for development. There have already been a few points of discussion which may lead to some changes in the future. First of all, several work corporations complain about the lack of flexibility of educational programmes. The Regional Education Centre (ROC), which provides secondary vocational education, is currently unable to deviate from the general start of educational programmes, which is September each year. This means that for several work corporations (e.g. World Cooks and Fashion with a Mission), in September the first group will exit and an entire new group of participants will enter. This could have a negative impact on the continuity of the company, since a group with relatively many capabilities will be replaced by an inexperienced group of users. Possibilities to increase the flexibility of the ROC are being investigated.

Secondly, cooperation between the work corporations will have to be improved, say some managers. As the manager of Solar Train argued,

Everyone has the same assignment, and if you have to purchase certain services, why won’t you buy it at a fellow work corporation? For instance, if the train has to be painted, why wouldn’t I let it be done by men of 2Switch [Green & Maintenance]? And if 2Switch has to drive from point A to B, why won’t they be transported by our train? We already have a concrete cooperation with World Cooks, because they also offer arrangements which include a ride with our train, while we can offer an arrangement which includes dinner at World Cooks. Then you will strengthen each other.

(Manager, Solar Train)

A manager of World Cooks thought the cooperation between work corporations can be very useful if a participant is not entirely happy at his current work corporation: “if someone is somewhere else and he says he would like to cook, well then they just have to call us. That little network has to be more visible”. She also wanted the municipality to assist more with regards to achieving re-employment. Many work corporations expressed their doubts whether they can really realise the expected outflow to regular work. They often lack the experience in getting in touch with the regular labour market. This knowledge is available at the specialised departments of the municipality, they argue.

A fourth potential problem is that there is a tension between the performance targets and the type of clients that are selected by the municipality. It could be that if the performance targets are difficult to reach, work corporations could request a higher entry level in terms of social skills and intelligence. Then the question would be whether the original target group enters the work corporation.

The municipality wants to take enough time to see if the concept can develop into a successful instrument. Hence, at least all current work corporations will continue in the near future. It is too early to say something about the “success” of work corporations. The municipality will carry out an evaluation at the end of 2012. Currently, project leaders are satisfied how things are going right now, particularly when it comes to the personal development of the participants. The number of work corporations is now set at sixteen. The municipality especially hopes that more private companies will be interested in forming a work corporation by offering single learn–work trajectories.